Japan's $500 Billion Military Buildup Faces Funding Crisis

Japan's Finance Ministry has warned against financing the country's proposed $500 billion military buildup through additional government debt, exposing a funding dispute as Tokyo prepares to expand its defense capabilities.

The ministry raised its objections during a meeting of the Fiscal System Council, a government advisory panel on fiscal policy, on November 5, according to Reuters.

Japan is considering a five-year defense buildup program worth between 70 trillion and 80 trillion yen ($443 billion to $507 billion) for fiscal years 2027 through 2031.

The proposed spending would represent a substantial increase from the current five-year defense program, which allocates approximately 43 trillion yen.

The expansion forms part of Prime Minister Sanae Takaichi's efforts to strengthen Japan's military capabilities amid growing security concerns involving China and North Korea.

However, the Finance Ministry has cautioned that additional defense spending should not be financed by issuing new government bonds.

The warning highlights the fiscal challenges facing Tokyo as it seeks to expand military capabilities while managing one of the highest public debt burdens among advanced economies.

Japan has also faced pressure from Washington to increase defense spending toward 3.5% of gross domestic product, a level the United States has advocated for its allies.

Local media have reported that an additional corporate tax increase is among the funding options under consideration.

Finance Minister Satsuki Katayama said in October that the government had not yet decided how to finance any further increase in defense expenditure.

The proposed military buildup is expected to prioritize long-range missiles, drones and advanced defense technologies.

The final spending level and financing arrangements remain under discussion as Japan prepares to revise its national security strategy and defense plans.